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China's economic growth slumped to its lowest level in almost three decades, weakened by the the trade war with the United States. Yahoo Finance's Seana Smith and Senior Vice President at UBS Wealth Advisors Kathy Entwistle discuss.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.After beating almost all rivals in China with 45% return in one equity fund, investor Qu Yang is shifting his money into Hong Kong.The money manager at Qianhai Kaiyuan Fund Management Co. has boosted the proportion of Hong Kong shares in one of his winning funds to more than 30% over the past three months, according to the fund’s latest fact sheet. That compares with just 13% at the end of the first quarter and is the highest allocation to Hong Kong stocks in almost two years, the fund’s historical reports show.“Hong Kong stocks have a better chance than A shares of outperforming in the second half," said Qu in an interview on July 4. Qu, whose Qianhai Kaiyuan SH-SZ-HK Advance Selected Flexible Allocation Mixed Fund is beating 98% of its peers, has sold some of his best-performing mainland stocks and bought the city’s casino and consumer-related shares.A likely rate cut by the U.S. Federal Reserve should draw more foreign investors to equities in the city, where valuations remain below historical averages, according to the fund manager who oversees some $970 million.Global traders are expecting a quarter-point interest rate cut by the Fed this month, with officials possibly easing by a half-percentage point, moves that would lure capital out of the U.S. to markets elsewhere that offer higher returns. The Hang Seng Index is one of the world’s cheapest major benchmarks.Hong Kong stocks are near the widest discount to their mainland peers in 16 months. Chinese investors piled into Hong Kong shares at the fastest pace in more than a year in June and continued their purchases this month, according to data compiled by Bloomberg. Credit Suisse this week upgraded both China and Hong Kong stocks to market weight from underweight in its Asia allocation excluding Japan.Shenzhen-based Qu is bullish on firms that benefit from China’s growing domestic demand, including internet companies listed in Hong Kong. Macau casino operators also stand to gain from their grip on the world’s biggest gambling hub, as well as increasing inbound travel to the city, he said.According to his fund’s quarterly report, Qu boosted assets in SJM Holdings Ltd. in the second quarter, while Sands China Ltd. and Tencent Holdings Ltd. were among the fund’s top 10 holdings by value. Representatives for Qu’s firm have not replied to Bloomberg’s requests for an update on his views since the July 4 interview.A-Share Picks Qu isn’t abandoning mainland equities. He still likes high-end liquor makers, for one. Kweichow Moutai Co., which featured among the fund’s top 10 holdings at the end of June, has climbed about 60% this year and recently became the first Chinese stock to hit 1,000 yuan ($145).“More consumers will be willing to buy more expensive baijiu due to China’s consumption upgrade,” Qu said, referring to the popular liquor Moutai makes.The holdings Qu sold last quarter include pig breeders because of uncertainty caused by the spread of African swine fever in China. He has cut holdings of one of his top-performing stocks Wens Foodstuffs Group Co., according to the fund’s quarterly report. Wens rallied 55% in the first three months of 2019 and then fell 12% in the second quarter.(Updates prices.)To contact the reporters on this story: Jeanny Yu in Hong Kong at email@example.com;Ludi Wang in Shanghai at firstname.lastname@example.orgTo contact the editors responsible for this story: Sofia Horta e Costa at email@example.com, Magdalene Fung, Will DaviesFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
It’s been more than two weeks since U.S. President Donald Trump and Chinese President Xi Jinping agreed to resume trade talks between the two economic powerhouses. However, conditions haven’t improved much.
Wall Street eased back from record highs on Tuesday amid worries over US-China trade talks, adding to the cautious mood in global markets as investors fixated on the first round of earnings from America’s banking heavyweights. President Donald Trump told reporters at the White House the US still has a long way to go before reaching a trade accord with China. The remarks helped drag stocks from record highs seen in the prior session.
Due to the uncertainty caused by the US-China trade dispute, and the possibility that trade tensions may escalate again, some investors are sitting on the sidelines, hoping the People’s Bank of China steps in to introduce more fiscal stimulus in the months ahead to steady the economy and to prevent it from slowing too quickly.
Broadcom and Gilead Sciences took early leads early Monday, but Citigroup led banks lower and Goldman and Boeing dragged on the Dow Jones industrials.
The operator of Hong Kong's tock exchange will introduce inline warrants trading on Thursday, marking the first roll-out of a new structured product in 13 years, part of its three-year plan to diversify into a leading Asian asset management centre.Fifty inline warrants will start trading on Thursday (July 18) on the stock exchange, issued by six banks, BNP Paribas, Haitong, HSBC, JPMorgan, Societe Generale and Vontobel.They are derivative products linked to the Hang Seng Index and the share prices of Tencent Holdings, China Construction Bank, China Mobile, China Mobile, AIA, and Ping An Insurance.The last structured products to be introduced by the Hong Kong Exchanges and Clearing the callable bull/bear certificates (CBBC) in May 2006. HKEX aims to be go-to giant for investment in Asia in three-year plan"As part of the three-year strategic plan of the HKEX, we will introduce more derivative and structured products to serve different investment strategies by investors," said Garbo Cheung, managing directors of markets for HKEX, in a media briefing."Inline warrants are popular in Europe, while we believe the investors in Asia will like to trade this type of product in Hong Kong."HKEX chief executive Charles Li Xiaojia, announcing the three-year strategic plan in late February, said the local bourse would like to introduce more currencies, fixed-income products and other financial derivatives to its offerings.Hong Kong is already a major centre for stock trading and has been the world's largest initial public offering (IPO) market six times in the past decade. However, in the first half of this year Hong Kong lost its IPO crown, dropping to No. 3 worldwide behind New York Stock Exchange and the Nasdaq, because of a lack of blockbuster listings.At the weekend beer giant Anheuser-Busch InBev scrapped a US$9.8 billion IPO of its Asian arm, the Budweiser Brewing Company, in Hong Kong, a month after ESR Cayman postponed its Hong Kong IPO that could raise up to US$1.24 billion. Both deals would have been the largest IPOs in the city this year.Anheuser-Busch InBev has scrapped a US$9.8 billion IPO of its Asian arm, the Budweiser Brewing Company, in Hong Kong. Photo: Bloomberg alt=Anheuser-Busch InBev has scrapped a US$9.8 billion IPO of its Asian arm, the Budweiser Brewing Company, in Hong Kong. Photo: BloombergTrading of derivative warrants and CBBCs now represents about 20 per cent of the total daily turnover of the stock market at the HKEX.The first batch of 50 inline warrants will have a lifespan of six months though HKEX rules allow them to expire up to five years later.Investors can hold them until the expiry dates or they can trade them on the stock exchange. The six issuing banks need market makers to quote prices for the warrants to ensure liquidity, Cheung said.Brokers have mixed expectations of how investors will respond to the products."This new product needs more promotions. Conceptually, it should be quite attractive," said Tom Chan Pak-lam, chairman of the Institute of Securities Dealers.Gary Cheung, chairman of the Hong Kong Securities Association, expected the initial interest in the new products to be limited."This is a derivative and a complex product. The intermediaries will need to assess the client suitability and be mindful in advising clients to abide by the complex product rules," he said.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
A gauge of global equities lost ground on Tuesday and U.S. Treasury yields moved higher as a stronger-than-anticipated report on retail sales raised the possibility the Federal Reserve could adopt a less dovish stance. U.S. retail sales rose 0.4% in June, as households stepped up purchases of motor vehicles and a variety of other goods. While the Fed is still largely expected to cut rates by a quarter of a percentage point at its July 30-31 policy meeting, expectations for a more aggressive half a percentage point cut have been scaled back.
Asian shares advanced on Monday as investors breathed a sigh of relief after encouraging Chinese data suggested the world's second-biggest economy may be starting to stabilise thanks to ramped-up stimulus from Beijing. The promising monthly activity data suggested a flurry of stimulus measures from China have been able to prop-up domestic activity and offset some of the damage from a protracted trade war with the United States, analysts said. Equity markets were choppy in the wake of the Chinese data as some expected Beijing might temper further stimulus.
On July 10, Federal Reserve Chairman Jerome Powell helped turn the global equity markets higher after he signaled a rate cut by the Fed at the end of July. He cited slowing business investments across the U.S. due to lingering uncertainties over the economic outlook as key reasons for his dovish tone.
Shares rose Thursday in Asia, tracking gains on Wall Street after Federal Reserve Chairman Jerome Powell suggested the U.S. central bank is ready to cut interest rates for the first time in a decade.
The Dow Jones industrials led a weak start Tuesday, as Virgin Galactic moved toward an IPO and Netflix stock jumped toward a new buy point.
Asian shares were a sea of red on Monday after strong U.S. job gains tempered expectations the Federal Reserve will deliver a large rate cut, while the Turkish lira hovered near two-week lows on worries about central bank independence. Share sentiment was also dampened by U.S. investment bank Morgan Stanley's decision to reduce its exposure to global equities due to misgivings about the ability of policy easings to offset weaker economic data.
Equity-market benchmarks in Shanghai, Tokyo, Seoul and Hong Kong all declined on Monday after relatively strong U.S. employment data reported Friday tempered hopes the Federal Reserve will cut interest rates later this month.
Asian shares hovered near two-month highs on Friday as investors braced for U.S. employment data, a key release that could stoke or temper market expectations about aggressive policy easing by the Federal Reserve. Trade across global markets was expected to remain subdued following the Independence Day holiday in the United States on Thursday and ahead of the non-farm payrolls report.
South Korea’s KOSPI fell as shares of technology industry heavyweight Samsung Electronics fell more than 1% after reporting that second-quarter profit likely dropped 56% as compared to a year ago. There is a growing dispute between Japan and South Korea over wartime forced labor, which will likely exacerbate the situation for Samsung, as well as other semiconductor rivals in South Korea like SK Hynix.
A strong U.S. jobs report that tempered expectations of an aggressive interest rate cut by the Federal Reserve later this month and weak economic data in Germany helped push global stock indices lower on Friday after hitting record highs earlier this week. Nonfarm payrolls increased by 224,000 last month as government employment rose by the most in 10 months, the U.S. Labor Department reported. The better-than-expected showing reduced the likelihood the Fed will cut interest rates at its next meeting later this month.
Hong Kong's compulsory pension scheme has clawed back all of last year's losses as a global stock market rally and an easing in trade tensions boosted returns in the first half of 2019.The HK$813 billion (US$104.43 billion) Mandatory Provident Fund on average achieved 8.4 per cent growth in the first half of this year, according to Lipper, which is a part of financial markets data provider Refinitiv.The fund lost 8.2 per cent last year, its worst decline since 2011 when markets were hit by the European bond crisis."The investment markets, surprisingly, have performed better than expected given all the uncertainties around the trade war, Brexit and global economies," said Philip Tso Wai-Pong, head of Hong Kong institutional at Allianz Global Investors. Huge overhaul will drag Hong Kong's MPF pension fund into 21st centuryThe MPF is a compulsory retirement scheme that covers 2.9 million Hong Kong workers and self-employed people.This year's performance so far is the best since the first half of 2017, when it delivered a 10.4 per cent return on average, according to Lipper.The MPF had a roller coaster ride in the first six months of the year as the ups and downs of the trade war played out between the US and China. The easing of tension in the first quarter benefited both stocks and bonds, lifting the MPF to a 7.5 per cent gain in that period.The fund then lost 4 per cent when US President Donald Trump more than doubled the tariff on US$200 billion worth of Chinese imports to 25 per cent on May 10. The MPF funds then bounced back by 3.81 per cent late last month when the leaders of the two countries agreed to return to trade talks at the G20 meeting.Funds in the US equities category led the growth with an average 17.9 per cent gain in the first half, followed by other stock funds at 15 per cent; Europe equity funds at 13.6 per cent; Hong Kong equity funds at 11.7 per cent; and Greater China equity funds at 11.7 per cent.All of them beat Hong Kong's benchmark Hang Seng Index, which rose about 10 per cent in the first half. Mixed-asset funds, which invest in both equities and bonds, gained 9.6 per cent in the first half.The more conservative option, bond funds, reported an average gain of 4 per cent in the first half while money market funds returned between 0.5 to 0.9 per cent. Hong Kong's MPF managers lobby for access to Shanghai and Shenzhen stocksThe only loser was Korean equity funds, which slipped 0.9 per cent, according to the Lipper data."Although the trade tension between China and the US seems to be easing, investors should not underestimate the volatility of the markets," Tso said.Kenrick Chung, general manager of employee benefits at Realife Insurance Brokers, also agreed that market fluctuation would continue."MPF members should not be too optimistic. Central banks in the US and other countries are preparing for rate cuts, which proves that there may be an economic recession," Chung said."MPF members should consider investing in Asia equity funds because of the increasing number of manufacturers moving their production lines from China to other Asian countries. For members approaching retirement, they should consider guaranteed funds."This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
Hong Kong's residents carried on business and their daily lives as usual, even as the local legislature was rendered inoperable for the past month by rallies that clogged the city's streets with the biggest number of protesters in history.The Hang Seng Index actually rose by 7.1 per cent since an estimated 1 million people took to the streets in protest on June 9, while the local currency strengthened by 59 basis points against the US dollar over the same period, bolstered by a truce in the year-long US-China trade war. Compare that with Occupy Central, the previous record holder of public protests, when the stock benchmark fell 2.8 per cent over 79 days in 2014.Dramatic pictures of the rallies made headlines around the world, resulting in an unprecedented apology by the city's Chief Executive Carrie Lam Cheng Yuet-ngor and an indefinite postponement of the controversial extradition bill that sparked the citywide opposition. Even as the legislature delayed several ordinances and bills, commerce was barely dented in Asia's second-largest financial market."It is business as usual for most Hongkongers, who understand that the markets will always rise soon after a crisis or a protest," said Wader Securities' chief executive Tammy Shu Yee-nar, who had been trading stocks since the 1980s through the post-Tiananmen crackdown protests in 1989, Asia's first financial crisis of 1997, Hong Kong's Sars outbreak of 2003 and the Occupy Central rallies of 2014. "Hongkongers have short memories, and they will soon go back to business after the marches and protests end. It is time to make money."Hong Kong's stock market and property sales, proxies of public mood, showed that the city was not about to let street protests get in the way of good deals. The Hang Seng Index rose 1 per cent on June 17, the day after an estimated 2 million people took to the streets, and again advanced 1.7 per cent on July 2 after protesters ransacked the local legislature the night before.Five real estate developers have sold 970 new flats between them since June 9, for a combined haul of HK$7.6 billion (US$975 million), as they attracted buyers with discounts, while prospects of interest rate cuts drew bargain hunters.A handful of deals were affected when some investors had a change of heart amid the political uncertainties, as dramatic photos of traffic being brought to a standstill by hundreds of thousands of white-clad street protesters were beamed around the world."The damage this time is more psychological than physical," compared with Occupy Central, said Kenneth Leung, the Hong Kong lawmaker who represents the city's accountants.Goldin Financial Holdings, which paid HK$11.1 billion (US$1.42 billion) for a plot of commercial land at the city's former Kai Tak airport in May, was the first to fold, announcing on June 11 that it would rather forfeit HK$25 million in deposit, than commit to a long-term project that would require an estimated HK$18 billion in investments.SCMP Graphic alt=SCMP GraphicIn a statement, Goldin's director Abraham Razack cited "social contradiction and economic instability" caused by the rallies two days earlier as his motivation for leading a boardroom revolt against the developer's chairman Pan Shutong.A week later, an unidentified buyer walked away from a HK$251.23 million luxury apartment in the Deep Water Bay neighbourhood, forfeiting HK$12.5 million in down payment, marking the city's second high-profile property default in nine days.Potential buyers vying for New World Development's Atrium House flats in Tsuen Wan on 22 June 2019, which sold out. Photo: SCMP/Xiaomei Chen alt=Potential buyers vying for New World Development's Atrium House flats in Tsuen Wan on 22 June 2019, which sold out. Photo: SCMP/Xiaomei ChenTiming mattered. Vanke Property, the Hong Kong unit of China's most valuable developer, chose June 16 to sell 251 units of its Grand Le Pont flats in Tuen Mun, the same day as the city's largest-ever public rally by an estimated 2 million protesters. Vanke managed to eke out sales of 30 of the 251 units available.Wheelock Properties and Sun Hung Kai Properties (SHK) had better luck with their timing. SHK sold 90 per cent of the 158 units of Mount Regency complex on June 22, while Wheelock's 504 flats at Grand Montara were completely sold on June 29.Initial public offerings (IPOs), the lifeblood of Asia's second-largest financial market, were also affected. ESR Cayman, Asia-Pacific's largest warehouse landlord, postponed its US$1.2 billion IPO plan on June 13, followed five days later by the US$500 million secondary listing of Hutchison China MediTech.SCMP Graphic alt=SCMP Graphic"Some IPO and M&A; clients decided to put their deals on hold after the protests of the past few week because they are worried about the political and social unrest in Hong Kong," said Clement Chan Kam-wing, managing director of accounting firm BDO.A truce in the US-China trade war following talks between the US and Chinese presidents at the G20 meetings in Osaka lifted sentiments.Anheauser-Busch InBev, the Belgian brewer of beers including Budweiser, Corona and Stella Artois said this week it is exploring a US$9.8 billion Hong Kong IPO for its Asia-Pacific business. That would top the scales as the world's largest fundraising this year, giving Hong Kong a much-needed boost to catch up with New York in the annual race for top spot as the global IPO capital.SCMP Graphic alt=SCMP GraphicThe biggest physical damage reported appears to be the vandalism of Hong Kong's legislature building, when a small but destructive group of protesters ransacked and laid the offices to waste.The repair bill of the building, which is not covered by insurance, is estimated at HK$50 million (US$6.4 million), which will have to be borne by the city's taxpayers, said the Legislative Council's finance committee chairman Chan Kin-por.With additional reporting by Sandy LiThis article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
Shares in Australia are being boosted by the Reserve Bank of Australia’s (RBA) decision to cut interest rates for the second consecutive month. Higher commodity prices are also providing support for the Australian stock market. They are being driven by rapidly rising iron ore prices.
U.S. stocks end higher on Tuesday despite gloomy outlook for world economy that are driving bond yields lower.
Stocks got off to a weak start Tueday, after Monday's strong gains. The Dow Jones index was less than 1% from a new high.
U.S. equity futures are set for modest opening bell as global stocks continue to grind higher following the weekend trade truce between Washington and Beijing. Risk sentiment remains cautious, however, as a brewing trade dispute over aircraft subsides threatens a fresh tariff spat between the U.S. and Europe and global factory output sinks to its lowest level since 2012. Global oil prices drift lower after OPEC members agree to extend production cuts by 9 months, into the first quarter of 2020, at this week's annual meeting in Vienna.